Seven militants who killed 20 people at a Dhaka restaurant were Bangladeshis and authorities had earlier tried to arrest five of them, said officials who denied claims by Islamic State of responsibility for the attack.

The gunmen stormed the upmarket restaurant in the diplomatic zone late on Friday and killed their mostly non-Muslim hostages, including nine Italians, seven Japanese and an American.

Claiming responsibility, Islamic State warned citizens of "crusader countries" in a statement that they would not be safe "as long as their aircraft are killing Muslims".

It also posted pictures of five grinning fighters in front of a black flag who it said were involved in the attack, according to the SITE monitoring website.

But Bangladesh Home Minister Asaduzzaman Khan told Reuters late on Saturday that neither Islamic State nor al Qaeda were involved. He reiterated the government statement that home-grown militants were responsible for a spate of killings in the country over the past 18 months, including the latest one.

"This was done by JMB," Khan said, referring to Jamaat-ul-Mujahideen Bangladesh, which claims to represent Islamic State in Bangladesh but has no proven links to it.

Islamic State also claimed responsibility for two bombings overnight in Baghdad that killed nearly 120 people and wounded 200, most of them in a busy shopping area while residents celebrated the Muslim fasting month of Ramadan.

Reacting to the two attacks over the past three days, Pope Francis asked people attending noon prayer at the Vatican in Rome to pray for the victims and their families.

Late on Sunday in Bangladesh, hundreds of men, women and children held a candle light vigil near Dhaka’s Shaheed Minar (Martyr's Monument) to pay respect to those who lost their lives.

As Dhaka limped back to normal life, security experts questioned the delay in launching the offensive against the militants. More than 100 commandos stormed the restaurant nearly 10 hours after the siege began, under an operation code-named 'Thunderbolt'.

Analysts say that as Islamic State loses territory in Iraq and Syria and its finances get drained, it may be trying to build affiliates in countries such as Bangladesh for jihadists to launch attacks locally and cheaply.

RICH FAMILIES

Deputy Inspector General of Police Shahidur Rahman told Reuters on Sunday that authorities were investigating any connection between the attackers and transnational groups such as Islamic State or al Qaeda.

He said the militants were mostly educated and from well-off families, but declined to give any more details.

National police chief Shahidul Hoque said all the gunmen were Bangladeshis. "Five of them were listed as militants and law enforcers made several drives to arrest them," he said.

Whoever was responsible, the attack marked a major escalation in violence by militants demanding Islamic rule in Bangladesh, whose 160 million people are mostly Muslim.

Previous attacks have mostly singled out individuals advocating a secular or liberal lifestyle, or religious minorities.

RECITING KORAN VERSE

Friday night's attack, during the final days of Ramadan, was more coordinated than the previous assaults.

Gunmen singled out foreigners as soon as they stormed through the doors of the restaurant popular with expatriates. They ordered all Bangladeshis to stand up before the killing began, a source briefed on the investigation said.

The Bangladeshis were later told to close their eyes and recite verses from the Koran. One militant cursed a Bangladeshi for eating with non-Muslims during Ramadan, the source said.

The Islamic State-affiliated Amaq news agency claimed in a report on Saturday that the militants identified and released Muslim patrons from the Dhaka restaurant, SITE said.

The victims also included at least three Bangladeshis or people of Bangladeshi descent.

The militants hacked most of their victims with machetes, leaving their bleeding bodies on the floor.

A standoff of nearly 12 hours with security forces ended when the commandos stormed the building, killing six of the militants and capturing a seventh after attempts at negotiations proved fruitless, authorities said. They recovered explosives and sharp weapons from the scene.

It was not clear if the attackers had made any demands.

HOME-GROWN GROUPS

Up until Friday's attack, authorities had maintained no operational links existed between Bangladeshi militants and international jihadi networks. Bangladesh has blamed JMB and another home-grown outfit for the wave of grisly killings over the past year and a half.

One line of inquiry being pursued was whether the restaurant attackers received any guidance from Islamic State or al Qaeda, an official in Bangladesh's counter-terrorism wing said.

"Pictures (uploaded on Twitter) indicate they might have been encouraged by ISIS (Islamic State) activities abroad," said Muhammad Zamir, a former senior foreign ministry official.

"But this does not show a direct link to ISIS. This is exactly what was done and disputed later in the case of the Orlando attack," he said, referring to the killing of 49 people last month by a man who pledged allegiance to Islamic State.

Friday's attack in Dhaka was the worst since 2005, when JMB set off a series of bombs throughout Bangladesh in the space of an hour that killed at least 25 people, mostly judges, police and journalists.

The authorities executed six top JMB leaders in March 2007 and police have continued to hunt for group members, often detaining suspected militants following intelligence tips.

In February, Bangladesh police arrested three JMB members suspected of killing a Hindu priest.

Islamic state has claimed responsibility for a series of other attacks in Bangladesh in recent months since first taking credit for a killing in September last year.

An Italian missionary was shot and wounded in the neck last November. Another Italian and a Japanese citizen were killed in attacks at the end of September and early October last year.

"SAVE ME, SAVE ME"

In a run-down government hospital in Dhaka, two police officers who were on patrol duty on Friday night were treated for gunshot wounds, with bandages and plasters on their cheeks and legs. Behind their beds, a sheet of paper carried details of their wounds.

Struggling to speak, 30-year-old officer Pradip, who gave just one name, recalled rushing to the spot after receiving a message that night. A blood-smeared man lay in front of the restaurant, shouting "save me, save me".

The police officers called for backup after they were shot at from inside the restaurant.

"At some point, I felt blood was rolling down my cheek," Pradip said. "We did respond with fire and the attackers stopped. We then rescued the man, who was the driver of some of the Japanese citizens who were inside."

After meeting the officers in the hospital, police chief Hoque told Reuters they had gleaned some preliminary details on the identities of the attackers, but gave no details.

GARMENT INDUSTRY

The seven Japanese killed were working on projects for the Japan International Cooperation Agency, an overseas aid agency, Japan's Chief Cabinet Secretary Yoshihide Suga said on Saturday.

Six of them were in Dhaka to work on a metro rail project, said Bangladesh's communication minister Obaidul Quader.

Italian media said several of the Italians victims worked in Bangladesh's $26 billion garment sector, which accounts for 80 percent of the country's exports.

A Bangladeshi garment exporter who supplies six European countries said his customers generally visit every two months but will now rethink that.

"I feel they will be afraid," he said, declining to be identified. "Even I am afraid."

(Additional reporting by Reuters Television in Dhaka; Writing by Tommy Wilkes and Krishna N. Das; Editing by Bill Tarrant and Tom Heneghan)

Nearly 120 people were killed and 200 wounded in two bombings overnight in Baghdad, most of them in a busy shopping area as residents celebrated Ramadan, police and medical sources said on Sunday.

The attack on the shopping area of Karrada is the deadliest since U.S.-backed Iraqi forces last month scored a major victory when it dislodged Islamic State from their stronghold of Falluja, an hour's drive west of the capital. It is also the deadliest so far this year.

Prime Minister Haider al-Abadi had ordered the offensive after a series of bombings in Baghdad, saying Falluja served as a launchpad for such attacks on the capital. However, bombings have continued.

A convoy carrying Abadi who had come to tour the site of the bombings was pelted with stones and bottles by residents, angry at what they felt were false promises of better security.

A refrigerator truck packed with explosives blew up in the central district of Karrada, killing 115 people and injuring at least 200. Islamic State claimed responsibility for the attack in a statement circulated online by supporters of the ultra-hardline Sunni group. It said the blast was a suicide bombing.

Karrada was busy at the time as Iraqis eat out and shop late during the Muslim fasting month of Ramadan, which ends next week with the Eid al-Fitr festival.

The White House on Sunday said the attack only strengthened the United States' resolve to confront Islamic State. "We remain united with the Iraqi people and government in our combined efforts to destroy ISIL," said the White House statement, referring to Islamic State.

Videos posted on social media showed people running after the SUV convoy of Abadi as he left Karrada after touring the scene, throwing pavement stones, bottles of water, empty buckets and slippers, venting their anger at the inability of the security forces to protect the area.

Abadi declared three days of mourning for the victims, according to state-run media that also cited him saying he understood the angry reaction of residents.

Another video posted on social media showed a large blaze in the main street of Karrada, a largely Shi'ite district with a small Christian community and a few Sunni mosques.

Reuters TV footage taken in the morning showed at least four buildings severely damaged or partly collapsed, including a shopping mall believed to be the target, and gutted cars scattered all around.

The toll climbed during the day as rescuers pulled out more bodies from under the rubble and people succumbed to their injuries.

Comments posted on social media accused security forces of continuing to use fake bomb detectors at checkpoints filtering traffic in Baghdad, five years after the scandal broke out about a device commonly known as the 'magic wand'.

A police officer in Baghdad confirmed these hand-held ADE 651 detectors were still in use. They were sold to Iraq and other nations by a British businessman who was jailed for 10 years in 2013 in Britain for endangering lives for profit.

AL SHAAB ATTACK

In a second attack, a roadside bomb also blew up around midnight in a market in al-Shaab, a Shi'ite district in the north of the capital, killing at least two people, police and medical sources said.

Iraqi forces on June 26 declared the defeat of IS militants in Falluja, a bastion of Sunni insurgency, following a month of fighting.

Now the militants were "trying to compensate for their humiliating defeat in Falluja," said Jasim al-Bahadli, a former army officer and security analyst in Baghdad.

"It was a mistake for the government to think that the source of the bombings was restricted to just one area," he said. "There are sleeper cells that operate independently from each other."

The assault on Falluja was part of a wider offensive against Islamic State, which seized swathes of Iraqi territory in 2014.

Abadi said the next target of the Iraqi forces is Mosul, the de facto capital of the militants and the largest city under their control in both Iraq and Syria.

50000 people march through London to protest against Brexit vote

Thousands of demonstrators marched through central London on Saturday in a raucous and colorful protest against last week's referendum vote to leave the European Union.

The marchers were nearly all young adults, and many were draped in EU flags while others waved banners bearing slogans such as "I'm with EU" or simply "Wrexit."

They chanted "what do we want to do? Stay in the EU," as they headed towards the Westminster political district to a soundtrack of songs including Rick Astley's "Never Gonna Give You Up" and Whitney Houston's "I Will always Love You."

Buses full of tourists cheered and cars tooted their horns in support - although one van driver, invited to honk by the crowd, shouted "I'm for out."

Cries of "shame on you" rang out as the march halted briefly outside the Downing Street office of Prime Minister David Cameron, who had himself announced the referendum in 2013.

Many taking part said they had been taken aback by the result of the vote.

"I was genuinely stunned on the morning after the vote," said Nathaniel Samson, 25, from Hertfordshire, north of London.

"I feel deeply uncertain about my future," he added. "I'm on the march to voice my discontentment. I am accepting the result, but it's to show that we won't accept it quietly."

London voted 60 percent in favor of remaining in the EU in last Thursday's referendum, with younger voters widely in favor of staying in the bloc, but the overall result was 51.9 percent in favor of leaving.

The vote to leave has prompted a battle within the ruling Conservative party to succeed Prime Minister David Cameron who said he would resign after the result.

The main opposition Labour Party has also turned on itself, with most of its lawmakers in parliament having voted to withdraw support for party leader Jeremy Corbyn after what they saw as his lackluster contribution to the 'Remain' referendum campaign.

Tom Clarke, 29, from London said: "I'm struggling to find the words to describe how I felt the morning after the vote. I was in mourning."

Italian Pamela Zoni, 34, who has lived in Britain for 6 years said she was very upset and having second thoughts about taking British citizenship.

"I would like a second referendum," she said. "The first campaign was based on lies, and the margin was so tight: it was not a fair result."

The demonstration ended peacefully with a rally outside parliament. No police estimate of the turnout was immediately available but one organizer put it at 50,000.

(Story refiled to correct spelling of 'result' in paragraph 9.)

(Writing by Stephen Addison; Editing by Andy Bruce, Greg Mahlich)

U.S. says kills up to 116 civilians in strikes outside war zones

President Barack Obama's government said on Friday it inadvertently killed up to 116 civilians in strikes in countries where America is not at war, a major disclosure likely to inflame debate about targeted killings and use of drones.

Obama's goal for the release of the numbers, which are higher than any previously acknowledged by his government but vastly below private estimates, is to create greater transparency about what the U.S. military and CIA are doing to fight militants plotting against the United States.

Non-governmental organizations estimate that hundreds of civilians were killed in such strikes, many of them by drones, in countries including Pakistan, Yemen and Somalia.

The U.S. government pegged NGO estimates of non-combatant deaths during its period of study, from Jan. 20, 2009, to Dec. 31, 2015, from more than 200 to more than 900.

Obama's administration acknowledged "inherent limitations" in its ability to collect data in dangerous target areas but strongly defended its estimates.

It also cautioned that NGO figures could be flawed, citing "deliberate spread of misinformation by some actors,' including terrorist organizations, in local media reports on which some non-governmental estimates rely."

Drone advocates, including those within the U.S. military, argue the strikes are an essential part of reducing the ability of militant groups to plot attacks against the United States. They say the government goes to great lengths to avoid civilian casualties.

Critics of the targeted killing program question whether the strikes create more militants than they destroy. They cite the spread of jihadist organizations and militant attacks throughout the world as evidence that targeted killings may be exacerbating the problem.

"We're still faced with the basic question: Is the number of bad guys who are taken out of commission by drone strikes greater or less than the number of people who are inspired to turn to violent acts," said Paul Pillar, a former senior CIA specialist on the Middle East and now a professor of security studies at Georgetown University.

Brexit: North America leaders meet with trade threats

The leaders of the United States, Canada and Mexico gathered on Wednesday to stress the importance of trade at a time of mounting international doubts about the benefits of globalization.

The three nations belong to the North American Free Trade Agreement (NAFTA).

Canada, the United States and Mexico mounted a fierce defense of free trade, vowing to deepen economic ties despite an increasingly acrimonious debate about the value of globalization.

U.S. President Barack Obama and Mexican President Enrique Pena Nieto also took swipes at U.S. Republican presidential candidate Donald Trump, who has vowed to renegotiate or scrap the North American Free Trade Agreement (NAFTA) if he wins November's election.

"The integration of national economies into a global economy: that's here, that's done," Obama told a news conference at the end of a summit dubbed the "Three Amigos".

"And us trying to abandon the field and pull up the drawbridge around us is going to be bad for us," he said after the talks, hosted by Canadian Prime Minister Justin Trudeau.

Trump says free trade has been disastrous, costing thousands of U.S. jobs and depressing wages.

Similar complaints were heard in Britain ahead of a surprise referendum vote last week to leave the European Union and its free trade area.

Obama and Pena Nieto stressed the importance of the relationship between their countries, which has come under strain amid heated U.S. campaign rhetoric.

"Isolationism cannot bring prosperity to a society," Pena Nieto said after bilateral talks with Obama.

Later, at the news conference, Pena Nieto warned of the dangers of populism in a globalized world and defended comments earlier this year in which likened Trump to Adolf Hitler and Benito Mussolini.

"Hitler, Mussolini, we all know the result," he said when asked to explain the comparison. "It was only a call for reflection and for recognition, so that we bear in mind what we have achieved and the great deal still to achieve."

The summit, Trudeau's first and Obama's last, could be the final harmonious one between the three countries if Trump wins the White House in the November U.S. presidential election.

Trudeau, who has generally steered clear of commenting on Trump's remarks since taking power last November, said that regardless of rhetoric the three nations would continue to have tremendously close relations.

Obama has strongly criticized Trump in recent weeks and took aim at the Republican's promises to clamp down on what he says is out-of-control illegal immigration.

The United States, he said, acknowledged public fears about the uncontrolled arrival of foreigners and had worked hard to secure its borders.

"America is a nation of immigrants. That is our strength ... The notion that we would somehow stop now on what has been a tradition of attracting talent and strivers and dreamers from all around the world, that would rob us of the thing that is most special about America," he said.

Obama - whose progressive social policies are very similar to Trudeau's - later received a rapturous welcome when he addressed the Canadian Parliament. In a speech often interrupted by prolonged applause, he said he understood that some people had genuine concerns about the pace of change.

"If the benefits of globalization accrue only to those at the very top, if our democracies seem incapable of assuring broad-based growth and opportunity for everyone, then people will push back out of anger or out of fear," he said.

"For those of us who truly believe that our economies have to work for everybody, the answer is not to try and pull back from our interconnected world. It is, rather, to engage with the rest of the world, to shape the rules so they're good for our workers and good for our businesses."

Protests over immigration have also been seen in Britain in the wake of the so-called Brexit vote last week, which at one point wiped more than $2 trillion off global equity markets.

Obama said he expected the world economy would be steady in the short run but expressed longer term concerns about global growth if Brexit went ahead.

Trump also opposes the 12-nation Trans-Pacific Partnership, which was signed in February but may not be ratified by the United States given increasing domestic resistance. Obama said on Wednesday he was committed to ensuring the pact contained high labor and trade standards.

One obstacle to free trade is the dumping of products at artificially low prices, and Trudeau, Obama and Pena Nieto said they agreed on the need for the governments of all major steel-making nations to address excess capacity.

The three also pledged to produce 50 percent of their nations' electricity from clean energy by 2025.

(Writing by David Ljunggren; Editing by James Dalgleish and Diane Craft)